Analysts predict Aetna is planning to acquire another carrier in the near future, likely Humana or Cigna, a move that promises to disrupt the industry.

A consolidation with one of the two carriers is an “imminent” possibility, according to Leerink Swann analyst Ana Gupte. The analyst group met Monday with Aetna management, including its CEO, CFO, president and senior operations head. Gupte, in an analyst report, said the meeting alleviated fears about the impact of higher Medicare utilization and “large-scale horizontal consolidation appears high on the Aetna management agenda.”

A consolidation of two large carriers could have positive and negative impact on brokers and the insurance industry as a whole, experts say.

“In some markets where network overlap and membership overlap results in consolidation, the merger could provide a more competitive product against larger market share leaders,” says Perry Braun, an EBA Advisory Board member and executive director of Benefit Advisors Network. He adds that in most markets this would be the Blue Cross Blue Shield franchise.

The impact to the providers, he says, “could also create disruption which could result in an opportunity for an adviser to guide an employer and their employees through the disruption.”

Specific to Humana, Braun says, if Aetna where to acquire the company, the Kentucky market is “an obvious growth in market volume for Aetna,” while for CIGNA, the Carolinas and international markets would be a boost. 

“I am sure there are other markets, and this specific market by market review should be conducted,” he says. “There are certain markets where Humana’s volume or Cigna’s volume will boost Aetna’s presence.”

Braun doesn’t feel an acquisition will immediately impact broker commissions, but long term “thinks it could change, as it has been changing for the past few years.”

Ronnell Nolan, president and CEO of Health Agents for America worries the acquisition could have a negative impact on broker commissions.

“My concern stems from legislation filed several years ago in Louisiana and many other states, in that Aetna's approach to commissions was to pay zero commissions, forcing agents/brokers to negotiate fees on top of continuously increasing premiums.  I question, if Aetna obtains other insurance companies, what would the insurance company's agent/broker relationship look like?  Our industry cannot handle too many more blows to our income.”

Aetna, Humana and Cigna all declined to comment. A spokesman from each company added, “We don’t comment on rumors or market speculation.”

Leerink Swann’s Gupte, however, says consolidation remains likely, with CEO Mark Bertolini saying government business will be a focus for inorganic growth.

She says Aetna’s commercial pricing discipline continues despite pressures on the small group market by the Affordable Care Act and “management is continuing its focus on margin over membership even for 2016.”

Aetna’s “pharmacy benefit management contract with CVS is also poised to retain a ‘Most Favored Nation’ clause with continued cost shifting to the consumer and direct manufacturer negotiations alleviating cost pressures,” she says.

Cheap debt makes a deal with either Humana or Cigna “meaningfully accretive possibilities,” Gupte ads. Tuesday she raised her price target on Aetna to $135 from $130 and maintained an Outperform rating on the shares.

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